HOMELAND SECURITY ADVISOR FRAN TOWNSEND MEETS WITH

S E C R E T SECTION 01 OF 03 ABU DHABI 000720

SIPDIS

NOFORN

STATE FOR A/S WAYNE, NEA/ARP, S/CT, INL/ENT, EB/ESC
STATE PASS FEDERAL RESERVE
TREASURY FOR ZARATE, GLASER, AND MURDEN
NSC FOR PATRICK HEFFERNAN

E.O. 12958: DECL: 02/02/2015
TAGS: ECON EFIN ETTC PTER TC KTFN
SUBJECT: HOMELAND SECURITY ADVISOR FRAN TOWNSEND MEETS WITH
UAE CENTRAL BANK GOVERNOR

Classified By: (U) Classified by Ambassador Michele J. Sison for reason
s 1.4 (b) and (d).


1. (U) This is an action request. Please see para 12.

Summary
--------------


2. (S/NF) Homeland Security Advisor Frances Townsend and UAE
Central Bank Governor Sultan Nasser Al-Suwaidi met February 7
and discussed the possible formation of a USG-UAEG terrorist
financing task force. They agreed that the USG would provide
the UAEG with a written proposal on the task force concept.
Al-Suwaidi confirmed that the Central Bank had issued
regulations revising its reporting requirements to include
both cash imports and exports. He stated that the Central
Bank had received suspicious transaction reports (or cash
declarations) from customs authorities, but directed Townsend
to Customs for a discussion on how aggressively they were
enforcing the regulation. He noted, however, that this was
an area in which the UAE would welcome USG training.
Townsend stressed that the new MENA/FATF organization
presented countries in the region a way to compare "best
practices" on Anti-Money Laundering/Terrorist Financing.
Al-Suwaidi commented that countries in the region needed to
do a better job in developing "coordinated or similar"
financial sector regulations to combat terrorist financing.
He also stressed that, while effective regulation of the
financial sector was good, total bans (for example on hawala
-informal money remitters) were not. End Summary.


3. (U) Homeland Security Advisor Frances Townsend met with
Central Bank Governor Sultan Nasser Al-Suwaidi on February 7.
Townsend was accompanied by Assistant Secretary of State for
Economic and Business Affairs Tony Wayne, Ambassador Sison,
NSC and S/CT staffers and EconChief (notetaker).

Joint U.S. - UAE Terrorist Financing Task Force
-------------- --


4. (S/NF) Townsend thanked the Governor for the Central
Bank's close cooperation with the USG in dealing with the
threat of terrorist financing. She proposed that the UAEG
consider a joint USG-UAEG terrorist financing task force as a
way to deepen this cooperation. She explained that the USG
had found these working level joint task forces, which bring
together the key agencies in both countries, made for more
effective and rapid cooperation. Al-Suwaidi, expressing
initial skepticism, asked how this would improve USG-UAEG
coordination. He noted that the FBI was already working
closely with the Central Bank on its Terrorist Financing
Operations Section (TFOS) investigations, adding that he
believed there was "nothing pending" from the Central Bank's
side. He asked whether Townsend could identify specific
bottlenecks. In response to Ambassador's comment that these
types of task forces could also enhance Federal-State (or
Federal-Emirate) level cooperation in both countries, he
responded that the UAEG already coordinated through the
national anti-money laundering committee and the
anti-terrorism committee. He emphasized that "in reality, we
are in regular contact with all concerned parties across the
UAE."


5. (S/NF) Nonetheless, Al-Suwaidi suggested that the UAE
could benefit from such a task force if it could get access
to the USG's "watch list" of persons and entities of concern
before the USG designated them or notified them to the UN.
He explained that the UAE would also be able to help more
effectively if it learned of U.S. concerns earlier. Townsend
replied that these task forces did improve informal
communication earlier in the process. Al-Suwaidi also asked
whether this task force would improve Central Bank training
opportunities. He asked whether the organization would meet
periodically or whether representatives from both countries
would work together on a daily basis.


6. (C) Townsend and Al-Suwaidi agreed that the USG would
provide the UAEG with a written document outlining the
proposal and possible options. Speaking with Ambassador
after the meeting, Al-Suwaidi emphasized that he didn't
oppose the proposal, but needed to understand it in order to
explain the idea to the Central Bank board of directors.

Cash Couriers and Hawala
--------------


7. (C) Townsend thanked Al-Suwaidi for his leadership in
regulating hawala and cash couriers. Al-Suwaidi said that
the UAE Central Bank would be hosting its 3rd Hawala
Conference on April 2-3 and was working with MENA/FATF, and
the IMF and World Bank on the program. He also confirmed
that the UAE Central Bank had issued a revised regulation
requiring individuals to report cash exports (as well as
imports) in excess of approximately $10,000. In response to
Townsend's question about implementation, Al-Suwaidi
explained that the Central Bank issued regulations, but that
the emirate level customs agencies were responsible for
implementation. He confirmed that customs authorities had
sent suspicious transaction reports (or cash declarations) to
the Anti Money Laundering and Suspicious Cases Unit, but that
he did not know how aggressively they were enforcing the
regulations. He agreed that implementation was key and asked
Townsend if the USG could provide customs with any training
on the subject. (Note: In a subsequent meeting, Chairman of
Dubai's Ports, Customs & Free Zone Corporation Sultan bin
Sulayem confirmed that Dubai customs was enforcing the cash
reporting requirement for all passengers entering Dubai, and
was even screening transit passengers for cash smuggling.
According to Central Bank statistics, customs officials have
sent the central bank 111 STRs -- or cash declarations --
from December 2000 until end-November 2004, or about 5% of
the total STRs/cases received by the Central Bank during that
time.

MENA/FATF
--------------


8. (C) Townsend stressed that the new MENA/FATF organization
provided the countries of the region an opportunity to
coordinate "best practices" and for the UAE to demonstrate
its leadership in the area of anti-money laundering.
Al-Suwaidi said that, although regional central bankers met
regularly, they needed to agree on common regulatory
standards. He asserted that the lack of similar standards
hindered international cooperation and opened the door to
subjective criticisms of financial institutions rather than
objective assessments. Townsend added that the lack of a
common set of standards allowed criminals and terrorists the
opportunity to move to jurisdictions with lower regulatory
standards. The Governor agreed.

Saudi Arabia
--------------


9. (C) After a brief discussion of the Saudi counterterrorism
conference, the Governor stated that the Saudis needed to
deal with a number of underlying problems to address the
terrorist threat. The people in Saudi Arabia, he said,
needed to be able to improve their lives. He added that, in
his opinion, growth and development would resolve many
problems. He explained that he had visited Jeddah in
December and everyone he met complained about difficulties
getting licenses to operate. He criticized the Saudis for
closing the money changers and exchange houses and replacing
them with one bank. This didn't make sense in his view,
because a country that hosts millions of pilgrims in a year
needs to provide more options for pilgrims and visitors to
change money, rather than limiting them to a few bank
branches. He agreed that regulation was important, but
emphasized that total bans were the wrong response to the
terrorist financing threat. Townsend acknowledged while the
Saudis have made enormous progress fighting terrorism, we
continued to work with them and more would be need to be
done.

Atmospherics
--------------


10. (C) The Central Bank Governor's first reaction to
Townsend's proposal on joint task forces was skeptical and
defensive. Based on his reaction, we believe that he
misperceived her proposal as an attack on "his" Central Bank.
Interestingly, he appeared to feel that there had been a
miscommunication as well. In a subsequent meeting with
Legatt, Al-Suwaidi said that he might have "miscommunicated"
with her. He explained that when he was referring to the
need for common standards, he was criticizing inconsistencies
among Arab Gulf States and was not commenting on the United
States. He said that he had had the impression that Townsend
may have misunderstood his remarks. After the meeting, he
added, he was even more concerned about the possible
miscommunication.
Comment and Action Request
--------------


11. (S) We continue to believe that the UAEG needs to improve
its interagency coordination and that the task force
mechanism could help in this area. During Townsend's meeting
with the Dubai Crown Prince, Dubai security services (SSD)
chief Brigadier Al-Qamsi inadvertently provided an excellent
example of the need for better UAE interagency coordination:
he explained that Dubai SSD had developed, independently, a
software program to track hawala use that it thought would be
beneficial in tracking and blocking terrorist financing.
After developing the program, now ready for testing, they
discovered that the Central Bank had developed its own
computer program aimed at accomplishing the same purpose. The
two agencies were in discussions to see which program was
better.


12. (U) Please provide embassy with a proposal for the
terrorist financing task force that we may share with the
UAEG.


13. (U) This cable has been cleared by Homeland Security
Advisor Townsend and Assistant Secretary for Economic and
Business Affairs Wayne.
SISON